Some may make 'millions' from drought

KANSAS CITY, Mo. - It's official: Most of the country is suffering through severe drought.
   
Some places are worse off than they were during the dust bowl of the 1930's.

It's so dry, more than 1,000 counties in 26 states have been declared disaster areas -- the biggest declaration ever.
 
And it's certainly a disaster for the farmers now feeling its effects.

According to a new report from the Kansas Agricultural Statistics Service, more than half of the state's corn crop is in poor condition.

Farmer Calvin Haile gave his own grim forecast.

"The soy beans are a little bit more resilient than the corn," he said. "If we can get some rain, they'll come back. But the corn won't. The corn is done."

It is already threatening to drive food prices to record levels, because corn has an impact on 75 percent of what is sold at the supermarket.

Still, while the drought is predicted to eventually end up costing us more at the grocery store, some stand to make a lot of money.

Traders on the floor of the Kansas City Board of Trade buy and sell mostly wheat, but also trade corn and other commodities.

While a smaller corn harvest could translate into higher prices for everything from cereal to soda, the higher prices at the Kansas City Board of Trade will mean richer wallets for some commodities traders.

In some cases, they will be richer by the millions of dollars.

"Over the next couple of weeks, a lot of money will be made and lost," Frank Stone, with the Kansas City Trading Group, said.

That is because the scorched corn crops are about to be harvested and the market is about to set the price of a bushel of corn.

The hotter and drier it stays, the more the price of corn will shoot through the roof.
     
The relentless summer sun has burned away one of the single most important imports to retail food.
      
Stone said if some traders time it just right when the corn moves closer to harvest, "Some of the larger traders I know, they could make a couple million dollars. That's monstrous."

But he warned trading is risky and not for the faint of heart. Time it wrong and some could lose thousands the next day.
       
"They might lose their house if they're wrong," Stone said.

The hot weather and dry conditions have made this summer's market one of the most volatile since the Dust Bowl.
         
"It's all about risk and reward," Stone said.

If some gain, someone must make up the difference.

So even though the dough may be rising at the local Farm to Market Bread Company, food makers like them are starting to worry how much dough they will have to shell out in the next several months, when high commodity prices trickle down to them and the dinner table.

John Friend with Farm to Market Bread Co. said prices have not gone up just yet.

"Eventually it will catch up to us," he explained.

All retail sales were down in June, with the exception of food. The first month of several the sweltering heat will burn customers at the checkout line at the grocery store.